Correlation Between Fidelity Dividend and Fidelity Global

Can any of the company-specific risk be diversified away by investing in both Fidelity Dividend and Fidelity Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Dividend and Fidelity Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Dividend for and Fidelity Global Monthly, you can compare the effects of market volatilities on Fidelity Dividend and Fidelity Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Dividend with a short position of Fidelity Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Dividend and Fidelity Global.

Diversification Opportunities for Fidelity Dividend and Fidelity Global

0.51

Correlation Coefficient

Fidelity Dividend  Fidelity Global

Very weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Dividend for and Fidelity Global Monthly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Monthly and Fidelity Dividend is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Dividend for are associated (or correlated) with Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Monthly has no effect on the direction of Fidelity Dividend i.e., Fidelity Dividend and Fidelity Global go up and down completely randomly.

Pair Corralation between Fidelity Dividend and Fidelity Global

Assuming the 90 days trading horizon Fidelity Dividend for is expected to generate 1.23 times more return on investment than Fidelity Global. However, Fidelity Dividend is 1.23 times more volatile than Fidelity Global Monthly. It trades about 0.17 of its potential returns per unit of risk. Fidelity Global Monthly is currently generating about 0.13 per unit of risk. If you would invest  3,200  in Fidelity Dividend for on October 5, 2024 and sell it today you would earn a total of  1,220  from holding Fidelity Dividend for or generate 38.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity Dividend for  vs.  Fidelity Global Monthly

Fidelity Dividend for

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dividend for are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Global Monthly

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Global Monthly are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fidelity Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Dividend and Fidelity Global

The main advantage of trading using opposite Fidelity Dividend and Fidelity Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Dividend position performs unexpectedly, Fidelity Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Global will offset losses from the drop in Fidelity Global's long position.

The idea behind Fidelity Dividend for and Fidelity Global Monthly pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.